Expired EBA Cancelled During Bargaining

After a year of stalemate in EA bargaining, a major employer has succeeded in cancelling its existing agreement, bringing employees back under the award. While it gave undertakings to preserve key existing benefits for employees, that promise is only good for six months. After that, all bets are off.

The Fair Work Commission heard evidence and argument from the employer and union about the organisation’s finances and capacity to pay employee benefits. But the employer also insisted many provisions of the existing EA acted as a brake on the way the operation runs. The employer effectively argued it had previously conceded a wide range of managerial rights which now prevented the organisation from coping with current industry realities.

The FWC agreed. In its decision the tribunal observed many of the agreement’s conditions “do impose significant procedural burdens and some costs on (the employer) and some clauses expressly impose constraints on how (the employer) operates and how it manages its employees”.

The employer made the point that the bargaining process was hamstrung by the very nature of its demands. It wanted the union and the employee representatives to agree to remove provisions from the EA. This, the employer said, was proving too difficult for them to manage. They simply could not countenance removal of existing entitlements. The constraints the employer complained of in turn were preventing the financial recovery it sorely needed.

The award would still contain some limitations but not enough to stop the employer making changes even while bargaining was afoot. If the agreement were terminated, the negotiations would be effectively ‘from scratch’. No one would be confronted with having to openly agree to forsake anything. This should assist the process, the employer argued.

The logic of this contention assisted the FWC determine the matter. If the employer gave an undertaking to reserve big ticket items like salaries and issues which did not unduly worry the employees and their families about their livelihoods, then it was likely the six month window to settle a new agreement would be the way forward.

The FWC cancelled the agreement observing that “in all the circumstances if the Agreement is terminated this will promote further bargaining and there is more likelihood the parties will successfully complete negotiations for a new agreement”.

Seeking to cancel an EA during bargaining is fraught, it won’t always work. But this employer demonstrated its needs for significant change. It convinced the FWC to act, thereby removing impediments to improving the bottom line and managing the workforce.

Murdoch University [2017] FWCA 4472 (29 August 2017)